Dow Jones rallied 2.18% and Nasdaq rallied 4.41% on Wednesday trade as FED chairman Powell announced plans to slow down on interest rate hikes.
FED target is to keep inflation at 2%. In October-2022, consumer price inflation is 7.7% when compared YoY.
There is a high possibility that Dec-2022, FED interest rate hike may be around 50 bps.
There is high possibility that Apr-2023 inflation in USA will be below 5% when compaerd YoY.
However USA job market will be in trouble for first 6 months of 2023.
There will not be any aggressive expansion plans in first half of 2023.
When the caution word hits markets, it is always better to invest in already profit making companies and also companies which has less loans. FED interest rate hikes will have less negative impact on companies which do not have bigger loans.
To cut operating expenses already some companies started layoff plans. Meta Platforms, Twitter, Amazon, Cisco, Alphabet, HP, DoorDash, Byjus, LYFT are couple of companies who announced their plans to layoff. Many companies freezing further recruitments.
First 6 months of 2023, there will be bit of tough time for USA job market. High value Real estate properties may tumble over 7% in next 6 months time frame.
Stay away from investing in real estate companies and it is always a good idea to buy real estate properties when the price tumble. In the very longer run, there will be again appreciation.
FED interest rate hikes and again FED interest rate cuts is a cycle. Both will follow each other.
We anticipate Dow Jones slide below 33,500 in next 2 months i.e over 1100 points from current trading value however it is a healthy correction.